Drax plans to invest four billion dollars in two new BECCS (bioenergy with carbon storage) plants in America as it prepares for tax breaks available under the Inflation Reduction Act.
Will Gardiner is the chief executive officer of the FTSE250 group. He also hinted at a possible listing in the future in America: “If and whenever we become a primarily, or a majority, US company, it’s worth considering.”
Drax, the company best known for North Yorkshire’s biomass power plant, yesterday announced “strategic opportunities” worth £7 billion over the next decade. Of this, more than half may be found in America. This is a major shift for Drax.
The UK government has not yet provided financial assistance to the company to retrofit its plant in Selby, but it still hopes to do so.
The Inflation Reduction Act, a $369-billion package of tax breaks and investment for clean energy that includes a $369-billion investment, has convinced Drax, and other companies, to increase their investment in the US. The company announced that it is in discussions to build two new BECCS plant in the south.
Gardiner stated that the main reason why the company decided to shift its focus to America is because “it makes economic sense” to use wood fibre in plants and storage facilities for sequestering carbon dioxide emissions. The Ira, however, was “clearly important and useful” because it increased tax breaks for carbon storage and capture from $40 per tonne up to $85 per tonne.
He also said that Drax will be able sell certificates of removal of carbon dioxide (CDRs) for every tonne it sequesters. “The supportive investment environment created [by the Ira] is stimulating action and robust prices for CDRs,” he added.
Gardiner said that Drax had not had any internal discussions about a US listing and had no plans at this time to do so, since “for a very long time, we will generate most of our value here in the UK”.
Drax shares closed at 635p, up by 2.2 percent or 13 1/2p.